In any business, overhead costs are those recurring expenses that show up month after month and bill after bill, and these expenses can have a huge impact on your bottom line. Usually considered administrative costs, overhead includes rent, utilities, phone, and all the other costs necessary to keep your business running.
Without careful monitoring, overhead can easily spiral out of control. Here are five ways you can start saving on overhead costs and help keep your company in the black.
Office Space – Commercial rental space is usually one of the biggest overhead costs, and it is one of the most inefficient of all admin expenses. Perform an analysis of your current office, retail, or warehouse space and your actual needs. Don’t just consider the size, but the location as well. Many small businesses lease too much space and could save considerable money on a more efficient office space. Also, you could pay considerably less on the same size space in a different part of town. Commercial lease rates usually vary depending on the section or location of the space. You may find that a similar space just around the corner from a busy thoroughfare is 25% less than what you pay now.
Electricity – There are many ways to save on electric costs. One way is to install motion sensors for overhead lights. This will assure that the lights are off when no one is in the office. Also, form a “computer off” policy when employees are out of the office.
Staff – Too much staff is also an overhead waster. Determine to staff to meet minimum needs. You can always hire temporary staff during peak times.
Insurance – Insurance is necessary, but you will find that different insurance companies offer various rates. Shop through agents and find a company that offers you the lowest rate for the best service.
Miscellaneous – Miscellaneous costs can get out of hand if not monitored. Here are a few to keep in mind.
- Overnight shipping – Shipping documents and items overnight can quickly become a large yearly expense. Try to save money by shipping express when you can, and coordinate shipping through one person to help control costs.
- Dues and memberships – Eliminate dues and subscriptions that are not absolutely necessary for your business.
Administrative and operational costs help keep your business going, but you can save considerable money if you find ways to cut costs and save on expenses. Do an overhead analysis today to find ways you can increase your profits.